FINALLY TONIGHT, POSSIBLE STORM CLOUDS ON THE STATE BUDGET HORIZON. RECENT STATE FISCAL BUREAU ANALYSIS SHOWS WISCONSIN IS ON COURSE TO BANK $94 MILLION LESS REVENUE THAN PROJECTED BY THE END OF THE CURRENT BIENNIUM – JUNE, 2017. COMBINE THAT WITH A BUDGET THAT CARRIES A THIN SURPLUS AND THERE’S CAUSE FOR WORRY SAYS WISCONSIN TAXPAYERS ALLIANCE PRESIDENT TODD BERRY. THANKS FOR BEING HERE.

TODD BERRY:

THANK YOU FOR HAVING ME.

FREDERICA FREYBERG:

IN THE SCHEME OF A MULTIBILLION BUDGET, ISN’T COMING IN $94 MILLION SHY OF PROJECTIONS KIND OF A DROP IN THE BUCKET?

TODD BERRY:

YOU’RE ABSOLUTELY RIGHT. WHEN YOU SPEND $15 OR $16 BILLION A YEAR, YOU SHOULDN’T HAVE TO WORRY ABOUT A SWING IN REVENUES. I THINK THE PROJECTIONS WERE DOWN ABOUT $158 MILLION. THE PROBLEM IS — AND HERE’S WHERE YOU CAN PUSH REWIND ON WHAT WE’VE TALKED ABOUT IN THE PAST, IS THAT LEGISLATURES AND GOVERNORS OF BOTH PARTIES HAVE NEVER LEFT ENOUGH OF A BALANCE IN THE GENERAL FUND SO THEY CAN ABSORB A SHOCK. SO ANY KIND OF LITTLE SURPRISE BECOMES MORE THAN A LITTLE SURPRISE.

FREDERICA FREYBERG:

BECAUSE HOW MUCH DO WE HAVE IN THE BANK?

TODD BERRY:

WELL, THE GENERAL FUND BALANCE NOW WILL BE ABOUT $70 MILLION, AND THAT’S A COUPLE DAYS OF STATE TAX COLLECTIONS. ANY KIND OF LITTLE SURPRISE AND, BOOM, WE’RE BACK, YOU KNOW, WHERE WE WERE TWO YEARS AGO AND HAD A SIMILAR KIND OF CONVERSATION.

FREDERICA FREYBERG:

AND SO YOU PUT STUFF OUT. YOU GIVE STUFF TO JOINT FINANCE. WHAT ARE POLICYMAKERS SAYING ABOUT THIS?

TODD BERRY:

WELL, WE PUT OUT ONE OF OUR NEWSLETTERS LAST MAY, AND IT SAID THAT THE ECONOMY WAS SLOWING, THAT THE FEDERAL RESERVE BANK SAID SO, THE COMMERCE DEPARTMENT SAID SO. THEIR OWN STATE DEPARTMENT OF REVENUE SAID SO. EVERY SIGN WAS. AND INDEED WHEN YOU LOOK BACK AT 2015, THERE WAS RADICAL SLOWING IN THE THIRD AND FOURTH QUARTERS. SO THEY KNEW THAT. OUR MATERIAL SUBMITTED TO EVERY LEGISLATIVE OFFICE. AND WHEN YOU’RE THAT LATE IN THE BUDGET, THEY REALLY DON’T WANT TO HAVE TO TAKE THINGS APART AND PUT IT BACK TOGETHER. SO THEY PASSED A BUDGET WITH A MINIMAL BALANCE. THE GOVERNOR SIGNED IT AND THE REST IS HISTORY.

FREDERICA FREYBERG:

AND NOW THERE’S ADDITIONAL STUFF THAT LAWMAKERS WANT TO FUND.

TODD BERRY:

WELL, YOU KNOW, THE SECOND YEAR OF A BIENNIUM IS GOING INTO THE ELECTION. YOU WANT TO HAVE SOME THINGS TO TAKE HOME AND TALK ABOUT. SO SMALL BILLS, $5 MILLION, $10 MILLION, THEY’RE NOT A BIG DEAL USUALLY. BUT WHEN YOU ONLY HAVE $70 MILLION LEFT, EVERYTHING BECOMES BIG.

FREDERICA FREYBERG:

HOW FAR COULD THEY REALLY LEGALLY TAKE IT DOWN?

TODD BERRY:

WELL, TO GIVE YOU SOME IDEA, THE BUDGET WAS BALANCED TO THE LAST $300,000 WHEN WE WENT INTO THIS BUDGET NOW A YEAR AGO OR MORE. SO, YOU KNOW, THEY’LL CUT THINGS RAZOR CLOSE. THE PROBLEM IS FORECASTING ERROR FOR THE LEGISLATIVE FISCAL BUREAU, THE DEPARTMENT OF REVENUE, ECONOMISTS GENERALLY -IT’S ALWAYS GOING TO BE AT LEAST 1% OR 2%. AND WHEN YOU HAVE BALANCES THAT ARE A FRACTION OF 1%, YOU’RE ALWAYS GOING TO BE IN TROUBLE.

FREDERICA FREYBERG:

SENATE MAJORITY LEADER FITZGERALD PROJECTS A TOUGH BUDGET IN 2017. HOW DO YOU THINK THAT PLAYS OUT?

TODD BERRY:

YOU LOOK AT THE GENERAL FUND BUDGET NOW. WE’RE SPENDING I THINK ABOUT $150 MILLION MORE IN THE COMING YEAR THAN WE’RE BRINGING IN IN REVENUE. SO YOU START THE NEXT BUDGET ALREADY, IN A SENSE, IN THE HOLE, NOT AS FAR IN THE HOLE AS WE DID LAST BUDGET WHEN WE WERE HUNDREDS OF MILLIONS OF DOLLARS UNDER WATER, BUT THAT ALWAYS MAKES THINGS HARD.

FREDERICA FREYBERG:

WHERE DO YOU THINK THEY’LL GO?

TODD BERRY:

I THINK THAT THE LEGISLATURE WILL PASS LEGISLATION AND THAT COSTS MONEY AND DRAW DOWN THE BALANCE SOME MORE AND WE’LL BE — YOU KNOW, WE’LL HAVE A BALANCE THAT’S PROBABLY AS SMALL AS WE HAVE SEEN IT IN A LONG TIME. THE LAST TIME WE HAD BALANCES THIS SMALL, WE WENT INTO RECESSION AND THE REST IS HISTORY. BIG TAX INCREASES AND BIG SPENDING CUTS.

FREDERICA FREYBERG:

WELL, GREAT, TODD. THANKS VERY MUCH. THANKS FOR BEING HERE.